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Peloton’s Legal Chief Rides Soaring Stock Price to Big Payday

Oct. 26, 2020, 9:50 AM

Peloton Interactive Inc.’s rising stock price has been a big win for co-founder and chief legal officer Hisao Kushi, who received more than $7 million in total compensation in the year after the company went public.

Kushi, whose payday was disclosed in a proxy statement filed Oct. 22, began advising Peloton in 2012 when he was serving as general counsel to several companies owned by Liberty Media Corp. He became the home exercise bike company’s legal chief and corporate secretary three years later.

Kushi didn’t respond to a request for comment about his pay, which comes as Peloton’s stock price has risen by more than 400% since its initial public offering in September 2019. His remuneration package includes more than $5.3 million in stock awards and nearly $1.9 million in cash.

Peloton has hired eight new in-house lawyers within the past year as the company battles competitors for market share in the home fitness space. The market has become increasingly lucrative in recent months as stay-at-home orders stemming from the coronavirus pandemic have shuttered U.S. gyms.

The company raised nearly $1.2 billion through an IPO last year that generated nearly $2.6 million in legal fees and expenses for the company’s securities lawyers at Fenwick, per securities filings. Peloton’s IPO prospectus said “individuals and entities” affiliated with Fenwick owned shares worth about $201,000 at the time Peloton went public, a common practice among Silicon Valley firms.

The company doesn’t have a formal employment agreement with Kushi, who is an at-will employee, according to Peloton’s proxy.

Peloton previously disclosed that Kushi sold off company stock in tender offers in 2018 and 2017 that netted him $4.6 million and $1.6 million, respectively. Securities filings show that Kushi also unloaded $10.7 million in Peloton stock last month. He currently owns roughly $208,000 in company stock, according to Bloomberg data.

Those sums stand in contrast to the $35,000 that Kushi earned in his first corporate law job at Universal Studios, he told Boston College Law School Magazine last year. Kushi graduated from the school in 1992.

In-House Additions

The New York-based cycling and exercise equipment maker brought on associate commercial counsel Perri Michael and Joseph Ingrao in September from meal kit company HelloFresh SE and personal training provider Exos Works Inc., respectively.

The two lawyers, both of whom are based in New York, were hired the same month that Peloton picked up U.K. counsel Nicole Shui in London, where she served as counsel for Northern and Eastern Europe at Uber Technologies Inc. Shui joined Pyn-An Sun, an international counsel added by Peloton in London earlier this year from her role as head of legal and compliance at online trading firm ETX Capital.

In July, Peloton brought on Empire State Realty Trust Inc. deputy general counsel and chief compliance officer Bart Goldstein as senior corporate and securities counsel in New York. Goldstein was joined that month at Peloton by Daniella Jones, a lawyer recruited from talent management agency Endeavor to handle legal matters for content production, media, and marketing.

Other in-house additions by Peloton include former WeWork Cos. Inc. senior counsel for intellectual property Steven Estrada, who joined the company as counsel in April, and former Revlon Inc. vice president of employment law Kristine Huggins, hired the month before as senior employment counsel.

Peloton also hired former Gracenote Inc. associate general counsel Cathy Lipetz in August as senior director of global music strategy. Gracenote is a music recognition software affiliate of media analytics company Nielsen Holdings PLC.

Going to Court

In February, Peloton settled a lawsuit filed against it by the National Music Publishers’ Association over the use of songs in the company’s popular workout videos. King & Spalding represented Peloton in that case.

Hueston Hennigan and Delaware’s Morris, Nichols, Arsht & Tunnell entered appearances this month for Peloton in a patent infringement lawsuit filed against the company by NordicTrack bike maker Icon Health & Fitness Inc. Both law firms are also advising Peloton in a separate dispute with Echelon Fitness Multimedia LLC, a rival fitness bike maker seeking to invalidate Peloton patents.

Morris Nichols; Fenwick & West; Irell & Manella; and Marshall, Texas-based Gillam & Smith have collectively handled 50% of Peloton’s U.S. litigation work within the last five years, according to Bloomberg Law data. Other firms representing Peloton in court during that time include K&L Gates; Littler Mendelson; Baker Botts; and New York’s Fross Zelnick Lehrman & Zissu.

To contact the reporter on this story: Brian Baxter in New York at bbaxter@bloomberglaw.com

To contact the editor responsible for this story: Chris Opfer at copfer@bloomberglaw.com

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